The Politics of Growth

With remarkable clarity, this year’s presidential campaign exposes the stark regional conflicts shaping U.S. politics. The country’s fastest-growing states overwhelmingly favor Texas Gov. George W. Bush, while the poorest economic performers support Vice President Al Gore. Undecided “battleground” constituencies are, almost without exception, average-growth states.

Recent polls confirm the surprising correlation between a state’s presidential preference and its economic performance. Since 1992, more than 21 million new jobs have been created in the United States. About half, however, were generated in 22 fast-growing Southern and intermountain Western states, including Texas, Georgia, Utah, Colorado, Arizona and Nevada, where barely one-quarter of the U.S. population resides.

Bush’s support is overwhelmingly concentrated in those states. On average, they grew by more than 3.4% a year, 60% faster than the rest of the country. Fifteen of the nation’s fastest-growing 20 states over the last decade currently support the GOP nominee.

In contrast, Gore’s political base is almost exclusively drawn from the nation’s slowest-growing, heavily urbanized states, including New York, Connecticut, New Jersey and California. On average, these states grew by 1.8% a year and produced only 30% of the nation’s new jobs even though they contain half the country’s population. Eight of the nation’s 10 economically worst-performing states since 1992 lean toward Gore.

The economies of battleground states, including Florida, Michigan, Missouri and Washington, grew by about 2.7% a year since 1992, almost exactly the national average. They generate nearly one-quarter of U.S. employment and account for roughly the same proportion of new jobs.

Ironically, if the election were held today, states that benefited most from the decade’s booming economy would overwhelmingly reject the candidate of the party under which they flourished. Those that did the worst, however, would opt for more of the same. And the country’s average-performing states are up for grabs.

What explains this correlation?

In the absence of a universally popular candidate, the country’s historic cultural and economic regional divisions are playing a greater role in determining November’s vote. During the 1990s, as the performance gap between the nation’s slow- and fast-growth states widened, so did the divisions between their underlying politics.

Slow-growth states are strong Gore supporters because a more regulated, less robust economy best suits the constituencies that control the country’s urbanized communities. Most, like New York or the Bay Area, share common histories of rapid industrialization, economic conflict and grinding decline. These experiences generated support for government to soften economic hardship and mediate between the haves and have-nots. Later, as new advocacy groups emerged, the scope of regulation was broadened to include noneconomic concerns like ethnic and environmental issues.

The politics and demographics of slow-growth regions were profoundly affected because, over time, high-end development pursued by the wealthy or well-connected--such as big-ticket stadium projects and large, urban, mixed-use projects backed by influential investors and corporations--stood the best chance of navigating the growing maze of bureaucratic and interest-group constraints. Overall, economic activity fell in slow-growth regions, but the costs of scarce housing, land, commercial properties and other urban amenities soared. Paradoxically, regulation greatly enhanced the already considerable power and wealth of urban elites.

In return, the privileged in places like Los Angeles’ Westside, Manhattan and San Francisco were willing to pay higher taxes and live with a more intrusive government as long as it kept the peace and their assets appreciated in value. To achieve this, most slow-growth regions developed an elaborate system of transfer payments for “targeted” recipients chosen by government. These ranged from high-tech companies frantically courted and subsidized by urban governments to public-works projects to social programs aimed at appeasing high-profile ethnic-advocacy groups. The result is the 1990s-style urban economy: relatively slow growing; a burgeoning super-rich and the high-end amenities they desire; a large public bureaucracy; and targeted intervention to ameliorate potential social conflicts.

This strategy, however, sacrificed businesses and families that depend on reasonable costs of living and that were not favored with targeted government assistance. During the 1980s and 1990s, the white middle class and manufacturing enterprises were particularly hard-hit. As a result, inequality skyrocketed in the country’s slow-growth regions. Yet, because disaffected groups usually gave up and left rather than fight against the political tide, slow-growth regions brokered a more or less stable social compromise among their remaining residents.

All this was made possible by the explosive development of fast-growing communities in the neighboring intermountain West and South. These areas were more racially homogenous than slow-growth regions, strongly influenced by self-help Protestant values and deeply suspicious of unions and government. Building on this culture, they promoted themselves as the economic and moral antithesis to slow-growth society.

Their efforts spectacularly succeeded. Disgruntled middle-class families, disfavored urban businesses and displaced workers flooded into boomtowns like Las Vegas, Phoenix, Salt Lake City, Denver, Dallas and Raleigh-Durham. California and slow-growth mid-Atlantic states lost hundreds of thousands of manufacturing and middle-class jobs to aggressive and increasingly antagonistic states like Texas, Utah and Georgia.

In the battleground states, there is a rough parity between constituencies attracted to either the slow- or fast-growth model. In Ohio and Michigan, for example, large urbanized areas are surrounded by rural communities that have more in common with the South. In Florida and Washington, wealthier slow-growth elites from California and New York struggle for power against indigenous agricultural and industrial interests far more enamored with Texas or Georgia. The election outcome may hinge on whether Gore and Bush can rally their natural allies in such states.

Yet, both candidates would be better served if they realized that the slow- and fast-growth models cannot stand on their own. Each would benefit from the principles of the other.

The problem with slow-growth communities, for example, is that they tragically limit economic opportunities that best help the poor and disadvantaged. Media-savvy advocates can manipulate the regulatory process to block virtually any activity they don’t like.

Bureaucratic caprice of this sort discourages investment and development in heavily regulated areas. That’s why low and median family incomes rose in fast-growing states over the last decade but fell in the more liberal Northeast and California. The broader a region’s range of economic activity, the more equitable its income distribution.

Gore could ensure greater equity by advocating that slow-growth-style regulation be limited by clear rules and standards that truly protect public goals. To be sure, certain activities would still be precluded even with such reforms, but those that meet clear standards could proceed without risk. This would dramatically expand social opportunities in slow-growth areas.

Bush’s challenge is to recognize that the desire for government intervention in slow-growth regions reflects legitimate equity and social concerns. Many of the problems bedeviling slow-growth regions--social fragmentation, widening class divisions and wealthy antigrowth movements--are emerging in fast-growth constituencies. It is not clear that they can be brushed aside in the future with the same self-help economics and Protestant orthodoxy that worked so well in the past. Bush could blend legitimate equity concerns with fast-growth ethics by proposing a reduction in payroll taxes, for example, which help working families far more than cutting income-tax rates.

It seems unlikely, however, that either candidate will take note of, let alone learn from, the profoundly different constituencies they represent. The conflict among the country’s fast- and slow-growth communities will continue to deepen long after the November election. One way or another, the next president cannot avoid the task of bridging America’s increasingly troublesome regional divide.